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Merriam: Trade war bravado risky gamble for Ontarians

The wisdom of Ontario starting a trade war with some U.S. states is questionable at best.

Premier Kathleen Wynne announced last week the government will act to “reduce procurement opportunities for states that pass Buy American laws.”

Translation: “If we’re kept from doing as much business in your state, we’re going to return the favour. We’re tough, don’t you know?”

One state likely to be a front line in such a trade war is New York.

That would be a David and Goliath fight. And unlike the Biblical version, this one might not have a happy, feel-good ending.

New York State’s population in 2016 was nearly 20 million with gross domestic product of US$1.103 trillion.

By comparison, in the same year Ontario’s population was about 14 million with GDP of US$473.4 billion.

A battle initiated by Ontario would be a little like a buggy maker challenging General Motors for sales of new vehicles.

Bravado of the trade war kind is likely to get Ontario swatted like an annoying mosquito by the big players in the U.S.

Furthermore, this is a major change in the Wynne government’s approach to U.S. business.

This is the same province and the same government that has done favour after favour for U.S.-based businesses in recent years.

The province sells excess electricity across the border at deep discounts with Ontario ratepayers picking up the costs of producing much of that power. Thus, American companies reduce their costs and are able to sell goods and services cheaper than their Ontario counterparts, that use power from the same source but at a much higher cost.

In addition, high power rates and other costs in Ontario have caused a number of businesses to close. Some have moved to the U.S.

Higher labour costs in Canada — most recently due in part to the increase in the minimum wage — also has made domestic businesses less competitive in the international market.

Nearly 60,000 part-time jobs were lost in Ontario in January, the first month of the higher minimum wage rates. Experts say it is too early to determine a correlation between those two factors, so readers are left to draw their own conclusions.

Getting back to a potential trade war, policies in the U.S. are in flux in large part because of the disarray in the Donald Trump White House.

In this regard, Prime Minister Trudeau’s strategy of a non-confrontational approach to Trump has kept Canada in the trade talk game for many long months.

It’s anybody’s guess if that approach will be successful in keeping at least a portion of the North American Free Trade Act in place. But at least we’re still in the fray.

Such a reasoned approach has a much better chance of moving us forward than threats of some kind of trade war coming out of Queen’s Park.

Ontario’s Opposition parties argue the whole trade war exercise is designed to distract the attention of Ontario voters from the Wynne government’s management of the province’s domestic affairs in advance of the June provincial election.

If so, it means the Wynne government is playing a dangerous game with the lives of Ontario workers and consumers, in the name of holding onto power.